Federal Budget
Government tax revenues are generally based on...
income
The ______ is an example of fiscal policy.
Federal Budget
Monetary policy involves smoothing out business cycles through the control of the ______ _____ (two words) and _______ ______.
money supply and interest rates
What are taxes on imported goods?
Tariffs
What is classical economics?
the government should have little to no role in the economy.
A _____ occurs when taxes equal expenditures.
A ______ occurs when more tax money is taken in than is spent.
A ______ occurs when expenditures exceed tax revenue
1.Balanced
2. Surplus
3. Deficit
How can we control inflation with fiscal policy?
raise taxes and decrease government spending
Falling interest rates will _________ business investment and consumption.
increase
What is an international trade agreement among the United States, Canada, and Mexico
North American Free Trade Agreement (NAFTA)
There are two schools of thought for driving the economy?
1. Supply-side economics
2. Demand-side economics
The Defense budget requires annual approval by Congress. This type of program is called a __________ program.
discretionary
US government is concerned about high unemployment. The appropriate fiscal policy is ______ spending or _______ taxes.
raise and decrease
You are chairperson of the Fed. Unemployment has just risen to 7% (that's bad). You will pursue a __________ monetary policy.
expansionary
Europe's trading Agreement
European Trade (Eu)
It is the year-to-year shortfall between government expenditures and revenues.
deficit
Veterans benefits are an example of a mandatory ______ program.
entitlement
The accumulated surpluses and deficits of the government add up to the ________ _______ (two words)
national debt
You are chairperson of the Fed. Inflation is out of control with prices increasing over 10% per year. To combat inflation you will ________ the money supply which will lead to a(n) ___________ in interest rates.
decrease and increase
A nation has an _________ if it can produce more of a good/service than another country.
A nation has an __________ if it can produce a good/service with lower opportunity cost than another country.
Absolute Advantage and Comparative Advantage
What are the three goals to help achieve an efficient economy?
1. Avoiding market failures
2. Minimizing negative externalities
3. Creating positive externalities
The government wants to reduce inflation. They will use a _______ fiscal policy.
contractionary
Fiscal policy is limited by lags and the fact that most government spending is ___________.
mandatory
Monetary Policy has three main tools
Setting reserve requirements for banks
3. Buying and selling US securities in order to control the money supply.
How would a tariff on a good affect a domestic producer of that good?
Domestic producers can compete against low wage producers from other countries
If the actual budget deficit is greater than the cyclically adjusted budget balance, the economy is likely in this.
recession or contraction